A Research note on the partnership between Tesla Motors and Panasonic to build the world's largest lithium-ion battery plant in the US. Looks at the position of each company and the raw materials required (graphite, lithium,cobalt).

1. Research note
Tesla Motors / Panasonic / the Gigafactory
Thursday, 31 July 2014
Simon Moores, Independent Consultant
Critical Minerals & Metals Intelligence
Email: sdmoores@yahoo.co.uk Twitter: www.twitter.com/sdmoores Linked In: click here

2. This research note has no affiliation with the companies
discussed and is to provide independent analysis on the
companies and industries mentioned. The author/authors
hold no financial interests or shares in any companies
mentioned.
Simon Moores, Independent Consultant
Critical Minerals & Metals Intelligence
Email: sdmoores@yahoo.co.uk Twitter: www.twitter.com/sdmoores Linked In: click here

3. Story: Panasonic commits to Tesla Motors’ super-battery plant,
the Gigafactory
 Based: USA
 Business: Car
manufacturing
 World’s highest profile
electric vehicle producer
 Based: Japan
 Business: Electronics
manufacturing
 One of the largest
portable battery
manufacturers in the
world
Batteries
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4. Story: Panasonic commits to Tesla Motors’ super-battery plant,
the Gigafactory
“Gigafactory represents a fundamental change in the
way large scale battery production can be realized.
Not only does the Gigafactory enable capacity needed
for the Model 3 but it sets the path for a dramatic
reduction in the cost of energy storage across a broad
range of applications.“
JB Straubel, CTO & Co-founder of Tesla Motors, 31 July 2014
“I believe that once we are able to manufacture
lithium-ion battery cells at the Gigafactory, we will be
able to accelerate the expansion of the electric
vehicle market."
Yoshihiko Yamada, Executive Vice President of Panasonic, 31 July 2014
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5. Tesla Motors strategy brief:
Tesla Motors Inc is the highest profile EV designer and manufacturer today. Through its EV assembling
plant in Fremont, California, the company produces its latest generation vehicle, the Model S and soon
the Model X.
As of December 2013 Tesla sold 25,000 units of the Model S, but is on track to sell 35,000 in 2014. The
car retails for $70-90,000.
Tesla is hoping this momentum will carry through to its first true mass market car, the Model 3 which
will use batteries produced by the Gigafactory, a huge project to build the world’s largest battery plant
in the USA. Tesla plans to produce 500,000 EV batteries a year by 2020.
The Gigafactory will double the world’s 2013 capacity of lithium-ion batteries when launched in 2017 in
a bid to bring down the cost of batteries by over 30%. Tesla has enlisted the help of its long term
supplier Panasonic to achieve this goal. Today it was revealed Panasonic are on board with the
Gigafactory.
Tesla and Panasonic will need huge volumes of critical raw materials (graphite, lithium, cobalt) for the
battery plant. The road to securing these raw materials starts now.
• Plans to reduce EV battery costs by > 35% through $6bn Gigafactory
• Sees EV producer turn into battery manufacturer
• Beginning drive to secure raw materials for Gigafactory

6. Panasonic:
• Japan electronics giant needs foothold in EV battery market
• Officially confirms it will build Tesla’s Gigafactory battery cells
Panasonic Corp, one of the world’s largest electronics and battery manufacturers, has confirmed today it
will officially partner Tesla Motors for the Gigafactory.
Panasonic will fund and build the battery cells for the 500,000 unit battery plant, including installation of
the equipment and bringing the expertise required. Tesla will effectively project manage the Gigafactory
providing the land, utilities, and buildings.
The Gigafactory will give Panasonic a firm foothold into the EV battery market, an area it has lost ground
in the last five years to rivals LG Chem, Johnson Controls Inc, and Automotive Energy Supply Corp. (a
Nissan / NEC j-v).
The project will also be a significant boost for high value, 21st Century manufacturing in the US and a
much needed step forward from steel and car manufacturing the country has become known for. There is
a feeling that the US missed its opportunity to be a serious player in the new battery age as it was too
focused on existing markets in the late 1990s to mid-2000s. The Gigafactory gives the country a golden
second chance.
While Japanese knowhow will be driving the project that will employ 6,500 people, it is American
invention and creativity that is hoping to break down the mass market barrier for EVs.

7. The Gigafactory| In numbers
Image: Simon Moores
• Launch: 2017, Capacity 2020
• Capacity: 500,000 EV batteries /
35GWh of cells / 50GWh of packs per
year
• Cost: $5bn
• Employees: 6,500
• Plant size: 10 million cubic feet
• Location: south-west USA, exact
location undecided, Nevada (Reno)
expected to be favourite
• Major raw materials: graphite, lithium
and cobalt
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8. Raw material impact:
What Tesla and Panasonic are planning with the Gigafactory could have a huge impact on the demand for
battery raw materials.
A Gigafactory at capacity in 2020 will effectively double the number of batteries the world produced in
2013. The impact on raw materials critical to battery technology with undoubtedly be game-changing
should the mammoth project reach its goal.
The volumes are outlined following this slides, but graphite (anode) will be the most in-demand raw
material for Tesla and Panasonic as the number one input mineral into a lithium-ion battery by volume.
Lithium will be the second most in demand product and significant amounts of cobalt also be required
(cathode).
These raw materials are not commodities but engineered products to strict specifications. Producing a
usable product in a battery is not as simple as digging it out of the ground and using the mineral such is the
case with commodities. They require further processing, engineering and testing with the battery
manufacturers to gain entry level standards.
Battery raw material availability will therefore be a major issue facing the Gigafactory.
• Batteries required a number of specially engineered raw materials
• Graphite, lithium and cobalt of highest importance
• Demand impact at capacity will be huge

9. Graphite
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
Battery-grade graphite demand in 2013
(natural, in tonnes)
World Gigafactory (conservative) Gigafactory (bullish)
Source: Simon Moores
Email: sdmoores@yahoo.co.uk Twitter: www.twitter.com/sdmoores Linked In: click here

10. Lithium
0
10,000
20,000
30,000
40,000
50,000
60,000
Battery-grade lithium demand in 2013
(in tonnes)
World Gigafactory (conservative) Gigafactory (bullish)
Source: Simon Moores
Email: sdmoores@yahoo.co.uk Twitter: www.twitter.com/sdmoores Linked In: click here

11. Cobalt
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
Battery-grade cobalt demand in 2013
(in tonnes)
World Gigafactory (conservative) Gigafactory (bullish)
Source: Simon Moores
Email: sdmoores@yahoo.co.uk Twitter: www.twitter.com/sdmoores Linked In: click here

12. Total critical mineral demand for Gigafactory
0
20
40
60
80
100
120
140
160
Increase in battery-grade demand from Gigafactory* on 2013 levels (%)
Graphite Lithium Cobalt
Source: Simon Moores * Gigafactory at capacity at 2013 utilisation rates

13. Gigafactory risks:
Should Tesla and Panasonic reach its goal of cutting battery costs by over 30%, both companies will need to
begin as far upstream as the raw material.
Minerals such as graphite, lithium and cobalt, in addition to copper and aluminium, will be the biggest
input costs into the Gigafactory’s batteries. Telsa will need to reduce the number of links in the supply chain
from the mine to the market in order to reach its cost reduction goal.
Tesla also has to battle a profile issue. It has positioned itself as a game-changing, environmentally
responsible company. Should the raw materials it sources be produced in an environmentally damaging
way, it would undermined what the company is trying to achieve and negatively impact its public profile
and with its share price. The company has already experienced a negative reaction from a Bloomberg story
reporting on graphite being produced in China.
Therefore responsibly sourcing raw materials is of paramount importance to Tesla. It has already
announced its intention to only source from North America, but this is widely expected to be expanded to a
global search for minerals and metals produced to western standards.
• Controlling raw material supply key to cutting battery costs
• Supply security could be a major issue
• Sourcing environmentally responsible raw materials also challenge
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14. Profile
• Independent consultant specialising in niche, critical
and industrial minerals and metals
• Graphite, lithium, vanadium, cobalt, fluorspar,
mineral sands
• Tracking supply, demand and prices in the industry
since 2006 when he joined Industrial Minerals
• Visited numerous mines incl: SQM (Lithium in
Chile), Black Dragon Graphite (Graphite, China),
American Vanadium (Vanadium, USA), Western
Lithium (Lithium, USA), Rockwood Lithium (Lithium,
USA), Ashapura (Bauxite, Kaolin, Bentonite, India),
Tata Chemicals (Soda Ash, India & UK)
• Interviewed by international press incl: The New
York Times with regards to rare-earths after he
broke the story that China blocked exports to Japan
in 2009, London’s The Times, The Australian,
Reuters, Bloomberg, Italy’s La Stampa
Email: sdmoores@yahoo.co.uk
Twitter: www.twitter.com/sdmoores
Linked In:
uk.linkedin.com/pub/simon-
moores/18/614/b06/

15. Speaking
Sydney, Australia, 8-9 September 2014
> Graphite Investment Seminar
Organised by
Email: sdmoores@yahoo.co.uk
Twitter: www.twitter.com/sdmoores
Linked In:
uk.linkedin.com/pub/simon-
moores/18/614/b06/
Shenzhen, China, 8-9 December 2014
> Global Resources Investment Conference
> Graphite Investment Summit
Organised by:
www.GRIConference.com
Sponsors: PwC, TMX, CWN Capital, Bennett Jones